Market Overview

Canadian Private Businesses in Decisive Turnaround, According to PayNet

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Canadian small business investment levels have shifted from
contraction to expansion

PayNet,
the leading provider of small business credit data and analysis, reports
that the PayNet
Canadian Small Business Lending Index
(CSBLI) increased 3% from
126.5 in May 2018 to 130.5 in June, marking the sixth consecutive month
of growth. Compared to the same month one year ago, the index is up 8%.

"In a decisive turnaround, Canadian small businesses investment levels
have shifted to solid expansion mode in recent months after spending
much of 2017 hunkered down," said PayNet President William Phelan. "Loan
originations among Canadian small businesses accelerated for the second
consecutive month on a year-over-year basis which, if sustained, should
provide a lift to economic growth and GDP — though credit risk may
increase as well."

Compared with June last year, Manufacturing saw lending jump 18% in June
2018, its sharpest increase since July 2011 and its fourth straight
month of double-digit gains on an annual basis. Other industries
experiencing substantial year-over-year increases include Transportation
(+24% Y/Y), Accommodation and Food (+23% Y/Y), and Retail (+12% Y/Y).
Three industries contracted modestly on a year-over-year basis:
Professional Services (-6% Y/Y), Wholesale (-4% Y/Y), and Agriculture
(-4% Y/Y). Regionally, Atlantic Canada (+15% Y/Y) and Alberta (+11% Y/Y)
were the biggest positive movers, while Saskatchewan (-6.2%) declined.

With increased investment, credit risk is expected to rise in the months
ahead, and recent data reflect this likelihood. According to the PayNet
Canadian Small Business Delinquency Index
(CSBDI), loans 30 days
past due or more increased 2 bps from 0.93% in May 2018 to 0.95% in June
2018. Compared to June 2017, however, delinquencies are down 14 bps and
have fallen for 15 consecutive months on a year-over-year basis.
Year-over-year, Manufacturing (+25bps Y/Y) and (Wholesale (+12bp Y/Y)
saw delinquencies rise. All other industries saw delinquencies fall.
Regionally, delinquencies fell or held steady across all provinces
except Manitoba (+8bp Y/Y) on a year-over-year basis. Quebec (-43bp
Y/Y), British Columbia (-30bp Y/Y), Alberta (-22bp Y/Y), and
Saskatchewan (-21bp Y/Y) all saw delinquencies fall by double digits
compared to June 2017.

"This month's release is indicative of a positive outlook for Canadian
small businesses and the broader Canadian economy," added Phelan. "Small
companies are a bellwether for economic growth, and PayNet data shows
Canadian small businesses across industries and provinces on the move
towards more production."

About PayNet, Inc. Canada

PayNet,
Inc. Canada
is the premier provider of risk management tools and
market insight to the commercial credit industry, collecting real-time
loan information from leading Canadian lenders and turning it into
actionable intelligence. The company's proprietary database — updated
weekly — is a growing collection of commercial loans and leases, worth
over $92 billion. Using state-of-the-art analytics, PayNet converts raw
data into real-time market intelligence and predictive information that
subscribing lenders use to manage risk, lower operating costs, originate
more loans and improve their business strategy. For more information
visit paynet.ca
and sbinsights.ca.

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